 "Aditya birla fashion and Retail")
Shares of Aditya Birla Fashion and Retail (ABFRL) rallied as much as 17 per cent on Tuesday after the retailer announced plans to demerge Madura Fashion & Lifestyle (MFL) into a separate listed company.
The stock finished at Rs 236, up 11.6 per cent over its previous day’s close. The proposed demerger will create two separate listed entities, where MFL will house popular brands such as Louis Philippe, Van Heusen, Allen Solly, Peter England, Reebok, and Forever 21.
Post the demerger, ABFRL’s portfolio will consist of value retail (Pantaloons), ethnic wear, luxury, and digital brands. Shares of TCNS Clothing, which is in the process of getting merged into ABFRL, also rallied 10 per cent.
Analysts said the demerger will have the Birla group firm catch up with competitors such as Trent. “This will hopefully give a focused play of a cash cow business like Madura with high return ratio and another business which is cash guzzling (will house rest of the businesses). A few years back market cap of Trent and Aditya Birla Fashion were similar. Now Trent is more than six times the market cap of Aditya Birla Fashion,” said a note by Nuvama Institutional Equities.
“The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value,” Aditya Birla Group Chairman Kumar Mangalam Birla said after the demerger announcement.
The stock finished at Rs 236, up 11.6 per cent over its previous day’s close. The proposed demerger will create two separate listed entities, where MFL will house popular brands such as Louis Philippe, Van Heusen, Allen Solly, Peter England, Reebok, and Forever 21.
Post the demerger, ABFRL’s portfolio will consist of value retail (Pantaloons), ethnic wear, luxury, and digital brands. Shares of TCNS Clothing, which is in the process of getting merged into ABFRL, also rallied 10 per cent.
Analysts said the demerger will have the Birla group firm catch up with competitors such as Trent. “This will hopefully give a focused play of a cash cow business like Madura with high return ratio and another business which is cash guzzling (will house rest of the businesses). A few years back market cap of Trent and Aditya Birla Fashion were similar. Now Trent is more than six times the market cap of Aditya Birla Fashion,” said a note by Nuvama Institutional Equities.
“The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value,” Aditya Birla Group Chairman Kumar Mangalam Birla said after the demerger announcement.
